Remember The OptiSolar Debacle? They're Back as NovaSolar

Does history repeat itself? The investors and executives behind NovaSolar really hope not.

The company says it has developed a process for producing amorphous silicon solar modules and building utility-scale power plants that it claims will essentially undercut any other vendor on the planet. NovaSolar can make solar modules for 62 cents a watt once it enters high volume manufacturing with its existing technology, says CTO Gautam Ganguly. Power plants, meanwhile, will cost $1.40 a watt to erect. The low prices come from reducing the steel, aluminum, wires and the components that surround solar cells in a module.

“Most of the cost of a solar module is not in the semiconductor. Most of the cost is in the polymers, the glass, the coatings,” said Ganguly. “(NovaSolar) is not dependent on a magic technology. It is dependent on a lot of little things.”

Based around ideas from a research paper published by Marvin Keshner at Hewlett-Packard in 2004, OptiSolar aspired to become a completely integrated manufacturer. It wanted to build "solar city" complexes with factories that could churn out 2 to 3 gigawatts of amorphous silicon solar panels each year. Rather than go with traditional frames, the paper suggested utilizing aluminum frames from commercial windows and backing the panels with inexpensive silicon or plastic.

Modules would cost 0.60 cents to 0.52 cents per watt to make. Fully installed, solar power would cost $1.00 to 0.88 cents a watt, the paper said.

Then CEO Carly Fiorina (in a rare moment of restraint) passed on the idea. Canadian mining and energy investors, however, ran with it, ultimately investing over $322 million into the company. By 2007, it had small production facilities in the Bay Area, but the big news was still to come. A few months later, it won contracts to install over 200 megawatts in Ontario and a 550-megawatt solar farm near San Luis Obispo for PG&E over several competitive bidders. Toward the end of 2008, California governor Arnold Schwarzenegger showed up for a factory opening that 60 Minutes covered.

Despite the TV turn, the company remained an enigma. It granted few interviews. Few in the solar industry knew them, and the fact that that PG&E selected an untested startup that hadn't even completed its commercial-scale module factory had many scratching their head. Still, some business model fanatics gushed.

The end came suddenly. Although the company had raised over $322 million, it was still trying to raise $200 million more at the end of 2008 during the credit crunch. Mass layoffs began weeks after the 60 Minutes appearance. By April, First Solar bought both utility projects for $400 million and swapped out OptiSolar's proposed amorphous panels for its cadmium telluride ones.

It then held the equivalent of a corporate garage sale to offload the equipment.

Enter NovaSolar. Ganguly, Keshner and other OptiSolar alums formed the new company and systematically bought back the equipment—at a further discount—from the third parties that had just bought it from OptiSolar. OptiSolar never declared bankruptcy because the investors had been paid off through the sale of the projects to First Solar. Still, the former chairman and investors decided not to participate this time around.